The real estate industry is seeing a powershift as larger companies swoop in to acquire smaller companies that have failed to come up with a way around the problems that have arisen from the coronavirus pandemic. Other companies are siphoning off parts of themselves to other companies in hopes of getting a little bit of financial relief in the meantime.
CoStar Group Inc., which has been doing fairly well, all things considered, is purchasing the commercial real estate arm of Ten-X LLC for $190 million. CoStar agreed to the terms to help increase its role in the commercial real estate sector which has seen nothing but obstacles since the virus began its rampage.
CoStar’s CEO, Andy Florance, expects “the volume of distressed properties coming to the market will surge,” and that CoStar is in the perfect position to meet those demands.
“We believe that our products remain mission-critical to the vast majority of our clients even as they deal with pandemic driven market disruptions.”
This is why CoStar chose Ten-X’s commercial real estate division. Ten-X was derived from auction.com, a platform meant to sell foreclosed homes.
“Ten-X and CoStar plan to create a new end-to-end commercial real estate platform."
The transaction is being facilitated by private equity firm, Thomas H. Lee Partners LP, which has owned a controlling interest in Ten-X for the last three years.
CoStar expects to close the acquisition in the third quarter of this year.
CoStar Group recently held a conference call to share the current financial standings of the company, which yielding good news. The company is in a good position to make it out of the pandemic unharmed. This acquisition is likely not the last.